Skip to main content

Blow For Homeowners...

Blow for homeowners as BoI to hike mortgage rate...


BANK of Ireland will today reveal that it is increasing mortgage rates for thousands of hard-pressed homeowners.

The move comes despite the European Central Bank (ECB) leaving its rates unchanged yesterday -- for the 11th month in a row.

Homeowners who are vulnerable to rising mortgage rates are now being warned that they have seven days to act.

Experts are advising new buyers -- as well as those who are coming off a fixed rate or are on a standard-variable rate -- that they should lock in now.

Bank of Ireland (BoI) and its subsidiary, ICS -- which between them have one in four mortgages in the country -- are to announce that they are increasing their standard-variable rates for existing customers by 0.5pc. They are also raising fixed rates by up to 0.7pc for existing customers who want to fix, the Irish Independent has learned.

The change in the standard-variable rates will add €80 a month to the repayments of someone on a €300,000 mortgage as the standard-variable rate goes from 2.6pc to 3.1pc.

Over the course of a year, the higher cost will amount to almost €1,000. The new rates will take effect from next Friday, April 16.

Existing customers of ICS Building Society who want to fix for five years will now have to pay close to 5pc from the middle of April -- up from 4.25pc.

Fixing for five years will become €100 a month dearer, based on a €250,000 mortgage over 30 years.

EBS Building Society is set to follow Bank of Ireland's hike with rises within days in its standard-variable and fixed rates for both new and existing customers.

The move by BoI/ICS comes just a week-and-a-half after AIB increased its standard and fixed rates by 0.5pc. This newspaper revealed that AIB plans two further rises before the end of the year.

Permanent TSB has hiked its standard-variable rates twice since last summer, pushing them up by 1pc.

The moves by domestic banks to raise their mortgage rates for both new and existing customers -- other than those that are on trackers -- means that their rates are now coming up to the levels already charged by foreign-owned banks in the Irish market.

When the ECB began cutting rates at the end of 2008, most of the foreign banks failed to pass on all the cuts on standard-variable rate mortgages.

The ECB left its key interest rate unchanged at a record low of 1pc yesterday -- the same level it has been at since last May.

Economists said there was little prospect of any rise in the ECB rate before early next year. Those on tracker mortgages will therefore escape rises, as these are linked to the ECB rate.

The BoI variable loan-to-value rate is also going up by 0.5pc. New customers of BoI will see fixed rates rise by between 0.4pc and 0.5pc.

ICS rates are to rise by more. The variable loan-to-value rate will rise by 0.6pc from April 16.

For existing ICS customers, two-year and three-year fixed rates will rise by 0.55pc, but the five-year rate will go up by 0.7pc.

REPAYMENTS

Both BoI and AIB have pushed up mortgage rates for existing and new customers, despite receiving €3.5bn each from the State. AIB needs an additional €7.4bn in capital and BoI needs a further €2.7bn.

It is understood that BoI will argue today that it is paying more to customers for deposits than it is receiving for mortgages, making its current mortgage pricing unsustainable.

The bank is adamant that it is supporting first-time buyers. It has lent €2bn in mortgages in the past year, with a third of this going to new buyers.

It is understood that of the 200,000 mortgages the BoI group has, some 60,000 are on standard variable rates.

Karl Deeter of Irish Mortgage Brokers said the move would push up the monthly cost for someone who has borrowed €250,000 over 25 years by €760 per year after tax.

"This comes in a year of cuts, levies, higher tax costs and deflation," he said. "It seems their greed knows no bounds."

The chief executive of the Professional Insurance Brokers Association, Diarmuid Kelly, warned that the better-value, long-term, fixed-rate mortgages were beginning to disappear.

He said: "There is a very short window of opportunity now for those seeking security around the level of their future mortgage repayments to act fast before the rates increase further."

And he warned that the risk associated with fixing for just two to three years was that people could leave themselves exposed to a large jump in repayments within a relatively short period of years.

Mr Kelly added: "Five years or longer at a value low rate is the optimum."


Report by Charlie Weston - Irish Independent

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an